Insurance Australia Group (IAG) and the Royal Automobile Club of Queensland (RACQ) have entered into a 25-year exclusive partnership to provide general insurance products for RACQ members and Queensland residents. This transformative deal aligns the strengths of two industry leaders to deliver robust insurance solutions and enhance community resilience.
Key Transaction Highlights:
- Ownership Structure:
IAG will acquire 90% of RACQ’s insurance underwriting business for $855 million, with an option to purchase the remaining 10% after two years on consistent terms. - Financial Breakdown:
- ~$522 million for the net tangible asset value.
- ~$333 million upfront payment for the 25-year distribution agreement.
- Gross Written Premium Impact:
The RACQ portfolio is expected to add $1.3 billion to IAG’s Gross Written Premiums upon completion. - Strategic Synergies:
Synergies exceeding $50 million annually, primarily from leveraging IAG’s reinsurance strategy. - Funding:
IAG will finance the acquisition from surplus capital, and the transaction is projected to be EPS accretive in the first full year.
Strategic and Community Benefits:
For RACQ:
- Retains brand identity and member relationships.
- Gains access to IAG’s scale, financial resources, and advanced technology in underwriting and claims management.
- Supports RACQ’s mission to build a resilient Queensland and enhance sustainability.
For IAG:
- Strengthens its foothold in Queensland, leveraging RACQ’s established brand trust among 1.7 million members.
- Enhances profitability with synergies and improved operational efficiency.
- Aligns with IAG’s commitment to climate action and community resilience.
CEO Comments:
David Carter, RACQ CEO:
“This partnership enables RACQ to continue delivering world-class insurance products and services while investing in building a resilient Queensland for all.”
Nick Hawkins, IAG CEO:
“The alliance showcases our shared values and builds on IAG’s proven track record of collaborating with leading member organizations.”
Julie Batch, IAG Retail Insurance CEO:
“We’re thrilled to welcome RACQ members and employees into this exciting collaboration, ensuring Queenslanders feel safe and protected.”
Transaction Timeline:
- Regulatory Approvals:
Subject to clearance by the Australian Competition and Consumer Commission and approval under the Financial Sector (Shareholdings) Act 1998. - Completion Date:
Expected by Q3 2025.
No Change to Existing Brands:
Both IAG’s and RACQ’s existing brands in Queensland will remain unaffected, ensuring a seamless experience for customers.
This strategic partnership marks a significant milestone, combining the strengths of two trusted organizations to secure the future of insurance services for Queenslanders.
